Posted
by
timothy
on Friday May 20, 2011 @08:18AM
from the just-a-minute-pardner dept.

Hugh Pickens writes "Senior US District Judge John Kane says there are serious questions about the validity of Righthaven's copyright infringement lawsuits in Colorado, and has put them all on hold. Kane says the main case in which he'll rule on the jurisdiction issue is that of Righthaven defendant Leland Wolf, who was sued over a Denver Post TSA pat-down photo. Wolf's attorneys filed briefs saying that based on Righthaven's lawsuit contract with Review-Journal owner Stephens Media LLC, its lawsuit contract with the Post is likely similar, and that their contract doesn't give Righthaven standing to sue. 'Righthaven very likely is neither the owner nor exclusive holder of any rights in the copyrighted work underlying this lawsuit,' say attorneys for Wolf. 'As such, Righthaven has suffered no injury or other cognizable harm required for it to have standing.' Judge Kane says he wants to resolve that issue before proceeding. 'Because there are serious questions as to whether my exercise of subject matter jurisdiction over Righthaven's claim of copyright infringement is proper, I think it most prudent to stay the proceedings in all pending cases in this district in which Righthaven is the named plaintiff,' wrote Kane. 'Should I find that I lack subject matter jurisdiction over Righthaven's claim of copyright infringement, it is likely that I will be required to dismiss all pending actions.'"

If all these cases are indeed thrown out, the defendants should be able to counter-sue not only Righthaven, but the newspapers that "contracted" (read: created) Righthaven. Because let's be honest, they created Righthaven for the sole purpose of lawsuits in an attempt to distance themselves from any litigation and possible losses. I'm willing to bet Righthaven has very little in way of actual assets or anything else of value with which to pay any judgements that went against them. Now, they might not be breaking the law, but they are certainly twisting it, bending it over, and raping it. They need to go after not just Righthaven, but the people behind it.

The thing is, once the defendants have this ruling, the next judge will be less likely to be willing to take the cases unless Righthaven can come up with some plausible argument as to why this judge is wrong (it doesn't have to be plausible to those of us on slashdot who are more than vaguely familiar with the case, just to someone who is not familiar with the case).
The other thing about where this judge is going is that it suggests that the "corporate barrier"* between Righthaven and its owners may be ea

No, the ruling is based entirely on that barrier. To have standing you need to show distinct and palpable legal injury that you have suffered. Since Righthaven can't or hasn't shown any legal right specific to them, (they haven't provided any evidence that they are the exclusive copyright holder) the courts aren't allowed to proceed based on the complaint filed. The complaint may be amended to show such proof and refiled, but if such a case doesn't have such proof it, a two sentence reply should get it dismissed again.

It's called piercing the corporate veil and is when you can plausibly show that a corporate entity is acting on behalf of a select individual or group of individuals and not on the behalf of the shareholders of said corporation or the corporation its self.

That is kinda of the problem Righthaven wants it both ways. They want the protection of the corporate veil so their creator's assets are not ever at any risk from a counter suit or other action, and at the same time wants to be able to collect damages from others who may have impaired those assets.

If they're cases arising from the same allegations, and the original cases were dismissed with prejudice, any competent lawyer should be able to get the suits dismissed due to the doctrine of res judicata [wikipedia.org]. That's much simpler than trying to make any other arguments as to standing, etc.

If the cases are dismissed without prejudice, then of course they can be refiled elsewhere, since there was no final judgment on the cases.

Beyond res judicata, any future defendant under the same contract with similar claims against them may be able to use Collateral Estoppel [wikipedia.org]. Beyond keeping the same suits from being relitigated, collateral estoppel prevents the same issues from being relitigated. Basically, since Righthaven had a full and fair opportunity to litigate whether they had injury under the contract and therefore any federal court had subject-matter jurisdiction under 28 U.S.C. 1338(a) (Righthaven may have also asserted 1331), an

Very unlikely. If Righthaven isn't the copyright holder, it has no more right to sue for infringement than I do. This is pretty basic Copyright Law 101 stuff, and no judge is going to risk their reputation ruling otherwise.

No, more likely copyright law will be amended by purchasing legislators in the next year or two to fix this "defect" in the law and allow third party, non-rightholders to sue on behalf of rights holders. Righthaven might be gone by then, but some new company with the same business model will start up, all in the name of "stopping rampant on-line piracy".

Yeah. Setting up Righthaven was a nice attempt to insulate Stephens Media from the obvious backlash that was likely to come from such their aggressive attempts at extortion. One would hope that Stephens Media titles would take a PR hit for this, but that's probably wishful thinking on my part.

They would have to actually sell the copyright, including the rights to all future legitimate licensing revenue, to Righthaven, for this to work; or at least exclusive rights to publish it on the internet within the US.

It sounds promising - he's acknowledging that TrollHaven likely doesn't even own this IP, and if they do, haven't been injured.

No, the judge noticed that RightHaven doesn't own the copyrights that it is suing about, and _because they don't_, they haven't been injured.

For $100, I sell you the right to sue anyone who damages my car for those damages. What do you actually get for the $100? The only thing you get is that when you try to sue someone who damaged my car, _I_ cannot come running to the judge and complain. However, you won't get any damages because the damaged car is not actually yours. You basically paid $100 for a right that isn't worth anything.

I don't think there is anything that could happen legally to the copyright holder, but I think Righthaven might go down for fraud. Let's say I have done something that makes me actually guilty of copyright infringement. The copyright holder can then take me to court, or ask for money in order not to take me to court, which I would have to accept. However, if anyone who is not the copyright holder tells me they are going to sue me, and asks for money, and I pay up, then I think this is quite clearly fraud.

This removes the "distance" that all of these companies using Righthaven chose Righthaven for, so they'd be liable for any losses. The current situation appears to leave only Righthaven responsible for any losses, and leaves the businesses free and clear of any possible loss.

Bingo. It's an illegal attempt to shield assets in a legal proceeding. I'd like the judge to rule that the agreement is a legal work for hire contract and that LRJ is responsible for any counter damages.

Something like that. I think that the idea behind creating Righthaven was meant to avoid having the newspapers themselves be the plaintiffs in these lawsuits, to put a (poorly thought out) shell between the papers and the suits (to try to dodge exactly the countersuit that has now been filed - Righthaven may go bankrupt if they lose, but the newspapers will, they hope, come out unscathed and set up another shell). But since the current suits are having trouble due to Righthaven not actually owning the copyrights, they may just reorganize in a different way, where the newspapers sign over all their copyrights to Righthaven with the newspapers retaining a license to use the material, and proceed exactly as they have been doing.

And when that happens these suits will be on much better footing (since, as far as I know, these defendants have actually been using material copied from the newspapers). They may still fail on fair use or other grounds, but it is then much less likely that some defense will come out that will invalidate the entire group of them. Assuming, of course, that the countersuit does not find the newspapers themselves liable for the suits in the shell company they set up, and bankrupt them all.

Disclaimers: IANAL. I have not been sued by Righthaven, and I don't believe I have ever copied anything from those newspapers (or even read anything from them except for occasional Slashdot stories linking to them).

But that change would mean the various rights holders would need to initiate the suit, even if using Righthaven as their legal representation.

From reading through the Righthaven contract that was made public about a month ago, it is very clear that the rights holders, while claiming to transfer copyright ownership to Righthaven for the sake or pursuing legal action or settlements, really did not intend to fully transfer copyright to Righthaven. There are so many clauses that cause copyright ownership to revert to the rights holders, and so many escape clauses for the rights holders, and limitiations on the transfer of rights, that judges are (imho, ianal) rightly questioning whether or not Righthaven has any legal standing at all.

The relationship between the rights holders and Righthaven is something like this:

i. The rights holder gives Righthaven a catalog of their copyright portfolio.2. Righthaven is told to seek out infringing use.3. When infringing use is identified, Righthaven is to request a transfer of copyright to Righthaven from the rights holder.4. As the copyright owner of record (contractually), Righthaven is then free to pursue whatever legal options or settlements they can negotiate, to recoup funds for infringing use. Such funds are eventually split between Righthaven and the original rights holder.5. After formal actions to resolve infringement incidents are resolved, Righthaven transfers copyright ownership back to the original rights holder.

On the surface, it looks like a plain strategy. Courts have previously allowed new rights holders to sue for infringement that occurred before they gained the copyright (since the infringement potentially devalues the purchased asset), but the complexities and nuanes of the contract with Righthaven made it very clear that, while called a transfer of copyright, what transpired seems to be much more like a grant of license (since it is clear that the rights holders had no intention to fully give up their claim of copyright ownership to Righthaven). That final point, that the transfer of rights to Righthaven required that Righthaven eventually return them to the original rights holders, is probably what has judges thinking twice. I don't believe copyright was ever intended to be put on loan so that a specialty firm could then try to bully hundreds or thousands of accused individuals (who may or may not have been protected under "fair use" provisions of US copyright law) into quick settlements as a way to generate a revenue stream

(in non-Judge speak)
Fuck you Righthaven, I'm not playing this silly game allowing you to game the system as a means to make money for stuff you don't even own. As soon as I am done writing my ruling and opinion on the matter, I'm tossing all your garbage.

Now, with luck, his opinion and ruling will be written in a fashion allowing those being sued to call upon another (yet lesser known) part of the DMCA allowing them to recoup damages (and legal fees) for Righthaven using the DMCA to knowingly bring frivolous lawsuits against them.